Which Way, Huawei? (With postscript).

All internet architecture has the potential for use as a Signals Intelligence Intercept platform (SIGINT). Data mining already occurs at the mid-range of IT frameworks, such as when Facebook collects personal information on users for consumer research (or more nefarious) purposes. Cell phones have GPS trackers, which requires software. The range of data-mining already at play in the commercial field is extensive. It therefore should come has no surprise that States also have an interest in data-mining, but for military, diplomatic and intelligence purposes.

If mid-level IT platforms such as FB and numerous other private agents can data-mine extensively with or without the consent of those whose personal information is being accessed, then it stands to reason that providing the basic support infrastructure for IT operations gives the provider even more opportunities at such. In a liberal market environment there are standards of conduct and protocols developed to restrict the unfettered access to private information. But what happens when a state capitalist enterprise is the provider of basic IT infrastructure?

In market capitalist systems the state serves the interests of capitalists by framing the legal and governance frameworks so as to encourage competition on an ostensibly level regulatory playing field. In state capitalist systems capitalists serve the interests of the state above and beyond their particular commercial interests. This is seen in European fascism, Latin American national populism, and in Asian developmentalism such as that of Singapore.

Huawei is the product of a state capitalist system. It was founded by and is led by former PRC intelligence officers. Although Huawei claims to be 100 percent employed owned, that is true only because the one-party authoritarian regime than rules China continues to maintain that it is Communist, which means that all employees are owners. Huawei has been designated as one of the seven national economic treasures that are considered to be essential strategic assets for Chinese power projection, and as such are subject to the strategic dictates of the ruling party. All of this is well known, and having independent local Huawei operators fronted by non-Chinese managers cannot disguise that fact, particularly when all of the components and associated hardware are engineered and made in the PRC.

The US and Australia have decided to bar Huawei from providing IT technologies to strategically important sectors of their IT markets. The US specifically excludes Huawei from any defense or security related contracts, and for that reason Symantec decided to sell its interest in Huawei USA. The Australians feel that their National Broadband Network (NBN) is too precious an asset to be opened to Huawei. They say they have their reasons, and that those reasons have to do with national security.

NZ has just signed off on several broadband infrastructure contracts with Huawei. The question is whether those responsible for the decision were aware of the US and Australian position and if so, why they choose to ignore it. The UK and Canada have allowed Huawei civilian IT contracts, which is important because they are part of the Echelon SIGINT and TECHINT network that binds the “5 eyes” parties together (along with the US, Australia and NZ). In the UK Huawei was awarded contracts for civilian IT, but that was followed by the government communications security agency running an extensive and costly forensics accounting of Huawei systems in order to ensure its cyber security, and even then cannot guarantee that the system is safe as far as covert “backdoor” entryways are concerned. This had something to do with the Australian decision.

95 percent of attempted probes into US corporate and security IT systems originate in the PRC. In the PRC all internet access is tightly controlled and monitored. Huawei is a leading provider of the IT systems used in the PRC, to include the firewalls used to censor foreign content and the tracking devices used to monitor internal dissent. Although all of this is circumstantial, this is the non-classified reason why US security agencies have decided that the company serves as a SIGINT front for the PRC. Add to that concerns about Huawei activities in foreign SIGINT gathering, and what you have is a reason to ban it from competing for security related contracts.

Of course, this could all be a corporate driven plot to preserve market share in the face of superior Chinese efficiency. Or, it could be racism. Or it could be part of the Trilateral Commission efforts to extend its world hegemony. I am agnostic on the exact reasons, but whatever they are, I sure do hope that someone in the National government was briefed by the GCSB and/or SIS on what they were. After all, as full intelligence partners with the US and Australia, one would think that these agencies would have received some of the classified details of why the US and OZ have their doubts about Huawei, and that these agencies would have dutifully reported to at least the Minister for Security and Intelligence, John Key, on the nature of these concerns.

Mind you, if the concerns about cyber espionage are true, I do not fault the PRC a bit for doing so. As an emerging great power with global economic interest and no intelligence sharing network such as Echelon on which to rely (unless one thinks that intelligence sharing with North Korea and Burma is a good counterpart to Western intelligence networks), then the PRC must–and I do mean MUST–develop its own human, signal and technical intelligence capabilities in the measure that its global interests grow. That is just the way the game is played in international security affairs.

The major sea lanes of communication between Latin American and Australasian primary good and raw material suppliers and the Chinese mainland pass through the South Pacific. It would therefore be remiss of the PRC not to seek to ensure the security of these vital channels, and one part of doing so is to have a better intelligence “grip” on what goes on in the countries through and in which they are situated. To put it in Brooklyn-ese: they gotta do what they gotta do because no one else is gonna do it for them.

That is why it would be helpful to hear a “please explain” response from Mr. Key on the matter.

Postscript: It turns out that as early as 2008 the concerns of NZ intelligence partners about Huawei were discussed in US embassy cables from Canberra (which were sent to the US embassy in Wellington, among other places). In 2010 the SIS and GCSB informed him that they could not guarantee that the broadband infrastructure would not be compromised if Huawei was awarded the UFB contract. For reasons as of yet unexplained, he choose to ignore the warnings. As it also turns out, India and South Korea have banned Huawei from critical IT infrastructure projects. Thus it seems that concerns about Huawei are not just a Western plot born of anti-Chinese xenophobia and a desire to protect market share for western businesses, but part of a wider conspiracy amongst China-haters of all stripes. Mr Key, however, is not one of those, and his meetings with Huawei executives at the 2010 Shanghai Expo is proof of that. (Note to readers: all of this has been discussed in the NZ mainstream media the past week, and the 2008 embassy cables were published by Wikileaks).

5 Responses to “Which Way, Huawei? (With postscript).”

“Huawei is the product of a state capitalist system. It was founded by and is led by former PRC intelligence officers. Although Huawei claims to be 100 percent employed owned, that is true only because the one-party authoritarian regime than rules China continues to maintain that it is Communist, which means that all employees are owners.”

I don’t buy it. Ren Zhengfei’s PLA background is cause for suspicion, but China does maintain a real difference between state, collective and private ownership. Private and collective (in ownership of rural land, for example) property rights are ill protected, for various reasons, but even so there is a huge difference in the legalities and structure of ownership between Huawei and Sinopec.

Oh, and the Chinese government does not claim that China is Communist.

“Huawei has been designated as one of the seven national economic treasures”

Reference? I’ve honestly never heard such a claim ever before.

“In the PRC all internet access is tightly controlled and monitored.”

Well, yes, but define ‘tightly’. Anybody with valid ID can set up an account with any ISP (with the obvious exceptions – prisoners, dissidents under house arrest, etc), and anybody – requirement for valid ID depending on location (Beijing is strict, some of the inland provinces often less so) and legality of said internet bar – can walk into any internet bar and get internet access. Yes, many websites are blocked, but the overwhelming majority are open.

“Huawei is a leading provider of the IT systems used in the PRC, to include the firewalls used to censor foreign content and the tracking devices used to monitor internal dissent.”

So are US companies like CISCO. Given NZ’s history, I don’t see why NZ should trust any of the big powers to be acting in our interests.

“Or, it could be racism.”

No. You’re concerns are well founded. The racism comes into objections to, for example, the Shanghai Pengxin bid for the Crafar farms where quite a lot of the commentary was along the lines of “The Chinese are coming! Lock up your daughters! Load your shotguns!”

I completely agree that there are perfectly valid security concerns when large Chinese companies start investing in sensitive areas in other countries. Just as China is right to worry when large foreign companies start investing in sensitive areas of China’s economy – and indeed large areas of China’s economy are off limits to foreigners precisely for security concerns (and some, like the media, for censorship concerns). I’m just not yet convinced there is any reason to worry about Huawei as much as you.

I dunno, you say you just want Key to give an explanation, but it seems given the open nature of your accusation there’s no real explanation that could answer your concerns. Given that you seem to feel that the very origin of Huawei in China is what makes them questionable, and that fact obviously can’t be questioned or denied, I think that there is no explanation that could satisfy you.

What’s your opinion on the UK’s investigation into Huawei?

(And yea, I would love to see a source for the the “national economic treasure” thing, too)

l_f on April 3rd, 2012 at 16:58

I suppose following that logic, everything ‘made in China’ comes under that same broad brush. Including Apple i-phones and I-pads.

Interestingly enough, the issue of spying by law enforcement comes into play like this case demonstrates.

With the UK (one of the 5 eyes) rolling out legislation for real time interception of electronic traffic ( which is already going on) and more revelations ; who should their citizens be really be wary of?

zed on April 6th, 2012 at 23:00

” Ren Zhengfei’s PLA background is cause for suspicion, but China does maintain a real difference between state, collective and private ownership.”

This is so delusional and devoid of even a modicum of insight into the nature of the Chinese regime it makes me wonder if you have any knowledge of China whatsoever.

“… can walk into any internet bar and get internet access. Yes, many websites are blocked, but the overwhelming majority are open.”

You missed the part out where state security functionaries shoulder surf customers to ensure they are not viewing subversive content which eluded government censors and filters.

“I’m just not yet convinced there is any reason to worry about Huawei as much as you.”

If we reach the point where its time to worry then NZ will have to discard a huge part of its internet infrastructure. Great.

Are you for real, zed? You need to start your comment by casting doubt on my knowledge of China? Why is that?

“You missed the part out where state security functionaries shoulder surf customers to ensure they are not viewing subversive content which eluded government censors and filters.”

You expect anybody to take that seriously? I’ve lived in China since October 1999, and never have I seen anything that resembles state security shoulder surfing anybody. Granted, it’s been a while since I visited an internet bar, but I see no evidence to suggest state security has started shoulder surfing in internet bars – or anywhere. Why do I say this? Firstly, the number of Chinese internet users surpassed the entire population of the US several years ago. The latest figure I saw for the number of Chinese internet users was 500 million. That may be a touch exaggerated. In China we have all the usual internet options, broadband, 3G, wireless, what have you. Do you really think the Chinese government has the will, let alone the resources, to hover over each and every internet user making sure they only read and post things that are nice and harmonious? Secondly, if you know China, you will know how ‘harmony’ turned into a river crab and why the ‘grass mud horse’ was so popular. You would also understand ‘my dad is Li Gang’. You would also know why Sina and Tencent were forced to turn the comment functions on their microblog services off for several days recently.

You seem to have missed the part where the Cultural Revolution ended in 1976 and the Gang of Four arrested and punished very soon after.